Blueliner CEO Arman Rousta teams up with Steve Powell, President and CEO of Presidents Council, for a discussion of sales and marketing trends in the field of Consumer Packaged Goods (CPGs). In collaboration with The Polymath Project, they explore the buying process for large chain retailers and the steps companies can take to successfully gain market share, including initial contact, follow up, negotiations, line reviews, price quoting and more.
The video in its entirety can be viewed below, or accessed through the following, unabridged transcript.
[Note: the transcript was automatically generated through AI. We apologize for any errors.]
ARMAN ROUSTA:
All right. Good afternoon, everybody. Welcome to The Polymath Project. Today is Wednesday, August 16th. Wow. Coming to the end of the summer, 2023. Hope everyone’s having an amazing summer. Really excited to invite and have on today, one of my longtime colleagues going on a decade now, and has also become a good friend, Steve Powell, CEO, and President of President’s Council. Hey, man. Welcome.
STEVE POWELL:
Hey, Arman. Good to see you.
ARMAN:
Likewise, likewise. I like your background, man. You’re out in Florida, right?
STEVE:
Jupiter, South, south Florida. Yeah. It’s terrible here.
ARMAN:
Yeah. Hot.
STEVE:
No, no. I’m kidding! It’s a beautiful place. This is, this is not, obviously not where I’m sitting, but it’s nearby. So it’s a peaceful little background that I like to use on things like The Polymath Project, which I’ve been watching for quite a while. It’s really nice to finally be a guest.
ARMAN:
Yeah, man. Listen, now we’ve been wanting to have you on, I know we’ve been working together for a while. To give the audience some context, Steve and I had first met . . . it’s gotta be a decade ago.
STEVE:
Eight years actually. Yeah.
ARMAN:
Yeah. I, I think, yeah. We started at one of the startups that I was involved in Ajustco actually, our first, you know, b.labs pilot project had a neat little product called the Ajustlock. We didn’t have any relationships with the buyers. We knew we wanted to be in Home Depot and Lowe’s, and all the big guys went out to the National Hardware Show, came across Steve and President’s Council. And man, I want the audience to hear from you. Tell us a little bit about the background. I know Presidents Council helped us get on the map and meet the people we needed to meet and learn a whole lot about what we needed to do better as far as packaging and process and all of that. So it was a tremendous education, and I think your organization obviously did a great job for us, and I know hundreds of others. So give us the background of Presidents Council. How did it start? What’s your role in it, and what do you guys deliver? What’s, what’s your value proposition?
STEVE:
Sure. Yeah. I mean, it’s, it, it is a bit of a convoluted, convoluted business model that you know, I, I’ve had I’ve had girlfriends before and their families that think I’m a spy, because it, it, they, I guess they kind of tune out what I’m halfway through, through the explanation. But basically we are an organization within the global home improvement industry that brings buyers and sellers together. And the way that we do that, for the most part, is we have great relationships at the senior level with most of the major, pretty much all of the major DIY home improvement stores worldwide that are big enough to take a full container shipment. So it, it really started back in the, the late eighties as a place for the presidents of companies that when you’re the president of the company across the supply chain chain, and this is just in, in home improvement for this, but it’s, it’s true across any, across any industry that, that the president is the company’s basically looked at to have all the answers.
And this was really a chance to bring the presidents in, in, in a kind of a more of a networking opportunity to talk about solutions to, to, to shared problems, those kinds of things in a non-competitive environment that was across the supply chain, so that we did conferences and seminars and things like that, where it was, you know, that we, we provided some good content. This is back in the eighties and nineties. And then the networking opportunities for sure, we took the concept to Europe, which is where the commercial part of it started back in 1988. That was Don Miller. Miller Powell and Associates is the controlling company for Presidents Council. Anyway, so Don went over to Europe, and he was coming in as Presidents Council.
I think most of the people thought he was somehow affiliated with, like, at the time it would’ve been H.W. Bush. So he got meetings with most of the major—at least in DIY—you know, president CEOs of, of the, of the major European retailers who were very interested to talk to the Americans, because the concept of big box home improvement really kind of started here. It grew out of small hardware stores and lumber yards, and evolved into today what we see as the hardware stores evolved into the co-ops, the lumber yards kind of took a divergence. Some of them ended up being the pro store, some of ’em, some, some ended up really turning into the, I mean, Lowe’s and Home Depots and, and, and, and that thing of the, you know, those type of, those type of stores.
So shortly thereafter meeting the Europeans that we, we came to the the National Hardware Show, which at the time was in Chicago with a company called Castorama, who was I believe it’s still either number one or two, or number number one or number two in France, and walk the show with them. They wanted us to see what their challenges were. And we realized right away that walking in here, we have, you know, one of the biggest retailers in the world, and we’re walking into a trade booth, and the, the, the supplier is looking over his shoulder, looking for his local rep. He has no idea the opportunity that stands in front of him. So what they really wanted to do was be able to make these trade shows more effective and efficient for what they were trying to do, identify the companies that not only had interesting products that would sell in their markets, but were interested in selling into their, you know, into their geographic markets.
So our buying day program, which is kind of our base level program for Presidents Council for bringing buyers and sellers together, started as international. And then once the hardware show divided back in 2007, it moved into also more domestic. So we do six to eight of these events a year. It’s kind of, you’ve been through ’em, Arman! It’s kinda like speed dating for buyers. We have all the buyers. Through our relationships at the senior level, we’re able to bring in an entire buying team, whether it’s at their offices, sometimes the trade show, it’s whoever’s there, you know, covering the trade show for ’em. And you get you know, 20 to 30 minutes to, you know, present your company, your marketing, your products, your, basically get your compelling reason to buy out there and figure out what the next steps are.
And we, we really manage straddling the line between buyer and seller, making sure both parties are happy with the end of it. And, and really what that means for the supplier typically is that you leave with a, with a, with a clear indication of, do I have an opportunity here? And if the answer to that is yes, what are the next steps? And we instruct the buyers and the merchants to that, that is what they need to be able to, to to tell them, oh, and if there, if there is no opportunity, identify the obstacle. That way the suppliers can go back and change and, and figure out what they want to, you know, if they can, if they can make changes and re-approach. ’cause Now they have the contact information, their indirect contact. And if not, just quit wasting time with it and get on with your business and look for sales opportunities elsewhere. So we also do some consulting on a very limited basis for companies that are typically looking to either come into this channel from like sporting goods or grocery or something else where they have a product that crosses over or crossing over geographic borders where we’ll help Europeans or, you know, south America, wherever, get into the big retailers in Canada, US a bit South America and, and Western Europe.
ARMAN:
That’s amazing. And, and I mean, again, I could speak from firsthand experience to say that the value proposition is absolutely worth it when companies, especially newer companies are out there spending thousands of dollars, going to shows, doing various forms of marketing, other others of which are very important too. But ultimately, when you’re going out to a trade show, like we were, you’re really sitting there for three days hoping to attract in Yeah. Or trying to get that buyer from Home Depot or Ace to come to your booth. And that’s not always a guarantee. Even if you’ve had some email and you’ve told them, we’re gonna be here, and they said, yeah, well, we’ll stop by doesn’t mean, you know, you might’ve, you might’ve gone to the bathroom or out to lunch, and they stop by and that’s it. You, you don’t, you don’t get to meet that person. So to have that meeting is invaluable. And I know for a just lock, and particularly it got us into Home Depot, Canada, so I could speak on firsthand experience there.
STEVE:
The trade shows I think are really great for and, and I mean, every, I’m not poo-pooing trade shows at all. I think they are an invaluable asset to our industry and others. Problem is they’re huge. And one of the, the really good things that you can do at a trade show and really what the, I think, I mean, these days, what is, is really your existing business and, and making sure that those buyers come in and, and you’re, and you’re forwarding, you’re showing the new products, you’re, you’re cultivating that existing business, maybe some old context. What we do really is kind of reverse that, where instead of the suppliers waiting for the retailer to come around, we sit the retailers down at a table and the suppliers come to them. So you’re definitely gonna talk to them, I think, and that tends to be better for, you know, pioneering new, you know, trying to find new businesses to actually make sure that you’re sitting down with them.
And then, you know, you still have to do the trade show after that. You, you’re, you’re, you’re cultivating that and you’re, you’re working with the existing business and and, and moving those conversations down the line. But yeah, that’s, that’s the reason we do these events. We do ’em at the National Hardware Show, at the Cologne show is called the Eisen, Warren Messa, which is basically a little bit bigger than the National Hardware Show, but in Germany that’s a little bit more global. And then at retailer’s offices we do five or six of these per year, whether it’s the ones we’ve got upcoming are Menards in November, it’s November 9th. You can visit presidents council.com to take a look at if you’re interested in talking to Menards. And then Europe’s leading d i y chain, which is kingfisher, the, the major brands, B N Q and CAMA for that.
We’ll have that next month at 26th in Chicago. They’re, they’re bringing their sourcing team in. So yeah, we do a bunch of those a year. I yeah, that’s there’s a lot of different ways to get started. Ours is a little bit different. And, you know, for our industry, I think there are, there are some other organizations that have kind of used that model. I think what we do really is, like I said, again, straddle that line and make sure that everyone is satisfied rather than if it, if, if just a supplier is handling it, it tends to be a little bit too skewed toward you know, what they want. When the retailer, when it’s just on them, they tend to, to to cancel a bunch of meetings that they probably should at least have a to. So it’s our, it’s our job to kind of straddle that line and make sure everybody’s happy. Well,
ARMAN:
I know that, you know, again, from, from firsthand experience and in helping, you know, startups deliver products into, into markets where there’s already existing players there’s always a protectionism, right? Like the brands that are established that own those planograms, they don’t like to see new companies coming in, trying to slice out, you know a square of their, of their real estate, you know, of their revenue, right? Yeah. And so while you’re always hearing from those VPs at the top, at, at like the big stores, we want innovation. We want innovation down the chain. There’s a lot of resistance, there’s a lot of friction that we’ve found. So, yeah. Do you agree with that?
STEVE:
Yeah, absolutely. And, and, and, and that, that is where our relationships come into, into play with, at the, at that senior management level where when we, when we’re scheduling these buying days, it’s hard to get buyers to actually just clear their schedule for a day, especially all of ’em at once. And it really takes the VP of merchandising to say, Hey, everybody’s gotta clear their schedule. We’re looking at new products today. And then even in our, even in our project work as we are helping suppliers, you know, we might do a 12 to 18 month, you know, project with a European supplier coming over to the US where we’re actually taking ’em into the offices and sitting down with the buyers, and the, the supplier is, is working with the, the the buyer and following up. In the meantime, I’m following up with the person that we help, you know, the VP of merchandising to help organize these meetings, to kinda help through that process where, you know, things may change. A buyer’s gonna come in and try a, a new buyer might come in and try to change things up just for the sake of changing things up.
ARMAN:
That’s the other thing. The buyers are changing all the time. Now, before we go further, Steve I’ve got a couple of really good questions in mind. I also want to be remiss if I didn’t mention and welcome anyone who’s joining us from LinkedIn live. It’s something new we’re trying to do, just to kind of offer in the middle of your workday if you’re, if you’re on the East Coast a little bit of material, you know, over lunch, something hopefully thought provoking that could stimulate ideas and help you, you know, in your business in any way. So, welcome to any number of people that are joining us from LinkedIn live, otherwise, you know, through Zoom and, and whatnot and other channels as well. So, thank you and welcome to the audience. And if you have any questions for Steve in particular, we’re gonna be here within the hour for sure.
Please just submit them through the comments in LinkedIn. And, and I’ll, I’ll try to get those questions relayed to Steve here. So with that said, Steve so it’s a very interesting position to kind of straddle that fence. You’re seeing all these ideas. Some are good, some may be not really so good or acceptable. I guess the market will determine that. And then you’ve got these buyers and VPs that are trying to encourage them, Hey, bring me something new. Let’s find innovation. So what, with that said, I’m sure you’ve seen and you’ve kind of gotten a pulse about like, hey, you’re hearing from buyers what they want to see. Like, do, do you get a lot of that? Like, Hey, we’d like to see more tech solutions, or we’d like, like so that you could cater. Then what kind of companies you try to put in front of them do, do you get that kind of input?
STEVE:
Yeah. One of the things we do in each one of the buying days is, ask each one of the buyers to fill out an evaluation. And it’s pretty simple.
ARMAN:
Beforehand or after the fact?
STEVE:
After their meeting. And really it’s on a level of interest to one, from one to five one being, this was a waste of my time, five being, these guys are really good, we should be able to move forward. This, and this is before you’re getting into the price negotiations and all that kind of stuff. So this is just, you know, was this, you know, was this 20 minutes worth of your time? Was, do you think there’s an opportunity here? And over the course of, oh my God it’s what, 25, 30 years? We’ve been tracking these things and like I said, it’s, it’s, some years is five of ’em. Some years it’s eight of them. It’s about 53% that are fours and fives. So every 40 minutes a supplier or a buyer is seeing something he’s never seen before that he finds really interesting.
And, and where it goes from there, you know, know, we’re, we’re working on, it’s a registration fee for the event. We’re not getting commissioned. So we’re not, we don’t really necessarily know what happens other than anecdotal things. People saying, Steve, you got me in, in Menards, thank you so much. We don’t, we don’t get a whole lot of that. But yeah, that’s more towards your question about, you know, what’s, what’s happening in the industry, you know, as far as not just product, but trends. A lot of what’s happening, especially very recently with the global supply shortage that happened, you know, what was it a year and a half ago, a lot of major retailers, especially from the US and Europe, are looking to diversify where their products are coming from. So they’re looking to get less dependent on Asia because they kind of figured out they had too many eggs in that one basket, and when there was a disruption there, they left ’em outta stocks.
And that’s lost sales. Yeah. As good as home improvement did through the pandemic, they could have done better. So that, that has been a, a, a real big trend if you’re, if you’re producing or even stocking product in either the US or Europe, somewhere outside of Asia, there’s a, there’s an increased recent bias towards those kinds of products, just, just for the simple fact of, of diversification. And it’s not necessarily having to take over their number one, you know, if it’s, if you’re trying to sell, you know, any major category through Kingfisher, you might not be their primary source. They’ve got sources all over the world and they but you may be a secondary source where they’re gonna be able to, to carry your product on, on some kind of a basis, and then be able to ramp up into larger things when there’s outta stocks and things. Like, they just wanna be able to balance their, their, their supply equation a little bit better.
ARMAN:
Right. And, and you wrote a, a, a very nice thought piece on this that we shared, you know, with our audience you know, over the last couple weeks where you had these, these five trends. So that was the first one. Can you maybe touch on some of the others that you see here? And we could, we could wrap about it as well. ’cause I know some of them entail, you know, marketing and, and omnichannel and things of that nature. But yeah. What, what are you seeing over the next few years here? Obviously that trend has already started, the one you just mentioned with the, with the sourcing. What, what else do you see?
STEVE:
Yeah, I mean, the other one that, that, that nobody wants to talk about is the, is the, the theft problem that is, that is popping up. And more and more retailers are getting really concerned with this ’cause they have very generous refund policies. And I mean, every week you’re hearing on the, if you, if you listen to the news, you’re hearing about, you know, somebody that’s gotten busted trying to, doing some kind of a scam with, you know, returning stuff to Home Depot that they didn’t buy and, and things like that. So that’s a, it’s a bit of a political thing as well that Right. You don’t want to get too far into it because we don’t know what’s gonna happen in the future. But it’s definitely a source of hand wringing for retailers. The other one really is the sustainability that, that, that keeps coming up.
And this is something that again, this could get political yeah. But for, for the moment, it is it, it’s customer driven and more of a marketing than a, than a, if it, if it becomes law, then it’s gonna be completely different. And, and but the, the, the, the, the basic solution to when people say sustainability, ’cause it’s not really all that well defined yet. There are kind of, it’s that you can look at it as the, the, the waste from the packaging and those kinds of things that, that are pretty easily solvable, at least Sure. From if, when the, when the retailer and the, and the supplier are working together to try to reduce some of the things. If you look at Europe as an example, customers can leave the packaging in the store and the retailer has to do with it.
So they’ve been reducing packaging for years over there. The other yeah, I mean the the other issue with if it gets down to trying to find the providence of each particular component of each product, which it did with lumber a long time ago. Yeah. I don’t know if you remember that there was a group called the Rainforest Action Network. They would be protesting Home Depot stores back in the late nineties and stuff. They were demanding. And this is kind of what, where the, the, the further the, the further side of this go is, is demanding that providence and it’s tough. The, the, the, the suppliers aren’t really a, they don’t really wanna share that with the retailer necessarily ’cause Right. They’re afraid they’re gonna go around them and try to get to their source and just Yeah. Competitive
ARMAN:
Advantage.
STEVE:
Yeah. And, and b, they, it’s it’s difficult to measure ROI on on sustainability, which is not all that well defined. So the retailers are, it, the solution to the, to the providence thing is to really be able to, to really integrate the, the, the supplier and the retailer in, into where everything’s coming from. And, and it’s a, it’s a massive undertaking. I think that’s gonna have to become law. Yeah. To really kind of push through. On the, on the other side of it, on the lighter side of it, where you’re just kind of trying to deal with waste and pollution and stuff. The retailers are gonna do what they always do. They’re gonna push all the responsibility down the suppliers and say, you guys handle it. Yeah. It’s, it’s coming. You might as well, which
ARMAN:
Is a lot, which is a lot of pressure, especially for the smaller suppliers. I mean, if you’re a bigger supplier, you might be able to, you know, absorb that in some kind of way. And, you know, you have your department that could study that and figure it out. But for smaller companies, I mean, that could be, that could be a crushing blow.
STEVE:
For the bigger companies, how do you measure it? You can’t measure against loss or against increased sales ’cause it’s a marketing expense, but it’s almost damage control marketing. So there’s not a real obvious way to, to measure that, which is tough for, for companies.
ARMAN:
I think, I mean, my 2 cents on that, and this is a way of kind of like, I don’t know if it’s straddling the fence. ’cause I mean, I definitely value the issue and support the concepts of just kind of sustainability and, and just yeah. Take, take, let’s take care of the planet, right? Yeah. while we’re doing business and making money and doing all the things, which is all fine. Let’s also take care of the planet within reason for each person’s responsibility. I think the answer, part of the answer is it’s, it’s brand centric. If you want to build a brand that’s all, like, I, I got some shoes when I was in Milan last year when I was in the airport. This, this very cool brand, never seen it before. It was like European Italian brand called Bogie, B O G G I. And I was like, there’s a cool store, and I got some sneakers and some other things. And then their whole packaging inside talked about how every part from the lace to the rubber to everything was like where it was from, and kind of what you’re talking about there. And I mean, look, I didn’t buy the sneakers necessarily because of that, but after I got them, I was like, oh, this is cool. No wonder these sneakers were 20% more expensive than I thought.
STEVE:
I mean, that’s the rub, right? It didn’t influence your decision. So I mean, it, that it’s, it if someone, for some people
ARMAN:
It might, for some people it, some people it might. And if they’re willing to pay for that, then I think that’s where brands have to decide. But I think it’s better for brands to decide as opposed to being forced, you know? Yeah. In my opinion, I think it’s okay.
STEVE:
Well, the, the, the customer’s driving this, so the, if the customer’s gonna drive the retailer, the retailer is gonna push it. I mean, it’s, it’s a, you know, some stuff rolls downhill. .
ARMAN:
Yeah, that’s true. And if you tell the customer, okay, you want it that way, like, again, you want the, or like, you know, me, I like the organic, you know, smoothies and I want the source for my food. I want the source, you know, and I’m willing to pay 30% more for the organic non G m o smoothie and juice and food period. Right. And with food, it’s gonna go in my body, I’m willing to pay, and I know it’s gonna cost more. So I just think it’s, if the customer’s demanding that and they’re willing to pay more ’cause they understand that it’s gonna cost more then I don’t see the problem. You know, I think, like you said, the problems come when it’s possibly gonna be imposed on people that maybe can’t afford it or don’t, don’t know how to quantify it, could put ’em outta business.
STEVE:
And in my opinion, anyway, until, until laws come into effect on this kind of stuff, it’s more of a marketing play than it is anything else. Right. And the, you know, if you’re forced into measuring ROIs . . . you gotta do it anyway. It’s Right. But at this point, it’s tough to measure it. It’s tough to, it’s a tough investment to make when you can’t measure it. Sure. As, as any investment is when you can’t measure it. So that’s and I, like I said, it’s a difficult subject to get into, and I don’t have a solution for it.
ARMAN:
No, I know, I know. But it’s a good conversation.
STEVE:
I tell people, if you’re a manufacturer, it’s getting pushed down on you just expect that. Right.
ARMAN:
True. True. And I think to take an example from a different market real quick and then we’ll move on, is look at the auto market, right? It’s like if you’re gonna be Tesla, or if you’re gonna be even B M W or anyone, you, you decide, and, and like some of them go all in like Tesla, all in electric and, and, and you know, the environment and others are like, you know, they have their hybrids, they have their electric, and they’re keeping, you know, it’s like they’re keeping that diversification.
STEVE:
I hear you. But the, the, the, the other manufacturers aren’t getting government subsidies to do it.
ARMAN:
Right. That’s true.
STEVE:
That makes that decision a hell of a lot easier. True,
ARMAN:
True, true, true point. Okay, cool. So t take us through another couple of these trends that, that you’re seeing and that you think are important for, for, you know, up and coming products, companies to, to consider as they’re trying to, you know, get into the market, you know, establish their brand.
STEVE:
Yeah, I’m not sure if there’s any real specific trends that’ll help with that. We can talk a bit about, you know, just the, the general process of buying.
ARMAN:
Yeah. Let’s, yeah, let’s get, let’s get into that. Let’s get into that. Yep.
STEVE:
And it can, it can be different. There are a lot of different . . . I always try to help suppliers understand that you really need to understand, you need to, to be empathetic. And this is why Polymath is a great forum for this. You need to understand, put yourself in the, in the merchant’s shoes and, and figure out, you know, understand their business, understand what motivates that merchant to, to make decisions, to be able to, to really you know, like we to, to get in there and really grow and, and, and help. What you wanna do is make your, your, your, your, your merchant a hero and help them grow their business. And think about it in terms of not what you wanna sell, but in terms of what’s gonna help them. Most people are gonna start, if they’re, if they’re going into a channel or a, in, in, you know, into a geographic market, you’re gonna start with a trade show.
It’s a good place to start. We talked about that a little bit earlier. There are kind of a few different ways. There’s, there’s your, your big national trade shows. National hardware is one that I, you know, but there’s, you know, the computer electronic show, all those, all those big shows which are valuable. They are crowded. Getting a share of attention from a merchant can be difficult. You gotta lure them into your booth, hope it’s the right person. It can be very helpful. But it’s also hard to manage. And, and it, like you said before, you’re kinda just kinda hoping somebody comes into your booth. The one kind of step removed from that is at least with a lot of distributors, if you’re, if you’re working with two steps in our industry, you know, ACE and True Value and do it best, and those kinds of stores have vendor shows, these are different.
You actually have to be invited to come into these things by the retailer. A lot of times they’ll actually have some, they’ll, they’ll take at least a small bit, a bit of your product into their warehouse to be able to service the shows. But this is where the, the dealer, the, the distributors putting on the show and their customers, which are the store owners or the, the people that are responsible for these independent stores are coming in and actually placing orders at the show. You should not expect that at a big show. If you get it, great. But that’s kind of the exception that proves the rule. Yeah, making contacts there. You’re starting, you’re starting dialogues at the, at the vendor show. The dealer shows you’re actually getting orders. It’s expensive. It is, they will admit it is a profit center as well as a sourcing form for them.
But if you get invited to ’em, it can be extremely productive. The buyer’s not inviting you. He’s not inviting you there just to make money for, for, you know, you know, whatever it is, three to eight K. He’s, he’s there expecting that there are, there’re gonna be orders placed. And you know that as you place more orders, lemme back that up a little bit. If, if you’re talking to a big box retailer and they’re not entirely sure that this is an absolute home run, they might invite you for a test market where maybe they put you into 30 stores to see how it does for a certain period of time. If you hit benchmarks on sales that they want you to hit, then it’ll be written in the contract that, that then that puts you in their inline business and they, and you’re on the shelf with a co-op or a distributor.
They don’t really have that kind of authority at the store level because you have store owners rather than store managers. So they, what, what they’ll do to kind of test the waters and not just test the waters. This is also for existing suppliers, but they’ll invite you to one of these shows where you actually have a chance to prove yourself. So if you, if you get into enough of the stores and stuff that, that’s a, that’s a pathway into getting more into the, into the the warehouses and then actually getting some of their national advertising, which, which then they can force you into the stores and, and get, you know, nationwide with you know, 3000 stores or whatever they have.
ARMAN:
Yeah, no, and we’ve been, we’ve been, you know, we’ve been down that road with, with a Just Lock with, with Orgill was the first, and they got their two a year and then do it Best and others. And you know, while, while I know your expertise is, you know, been in, you know, hardware and d i y you know as you know, you know, I, I had the electronics product with, with Exeter Technologies back in the day. So, as you said, every industry has a version of this, you know. And I’ve seen now, in several industries, that process happens in somewhat of a similar fashion. Although every industry has its nuances. And one way or another, as we said before, there’s always resistance. Like it takes a while to get into the warehouse and whatnot, because, because there’s other guys in there. It’s like, there, there’s politics, right? And that’s why you kind of have to, there’s a staying power that has to happen. You don’t show up at one or two trade shows and think we’re done, we’re in. It’s like, no, you want to be in this business, get in this industry, get to know people. I mean, look, you guys have spent 40 years fostering those relationships.
STEVE:
Yeah. If, and for a supplier, especially if you’re going into a form foreign market, they wanna see that you’re, that your feet are on the ground there, you know, often enough they don’t want to. And we are back to the shows a little bit. Yeah. We already talked about stuff and, and that is just a little bit different. The original intention of that was to, to make the show better for the buyers right. It turns out making it better for the suppliers too. But all the while I think it’s a, I mean, I’m obviously biased , but I think it’s, it’s the best way to get in. It doesn’t completely replace trade shows and, and those kinds of, you, you, we do them at trade shows. We do them at buyer’s offices.
But the intention of the trade show . . . it’s changing, but it’s still an invaluable tool for getting into the start market. But that is a first step. And, and, you know, you, you get that first step and then, you know, now where are you? You got, you got a contact or you, you had a good you know, meeting now, now you’re being asked for a, you know, typically they’re gonna, they’re, they have to have a look at your product. You’ve, you’ve given ’em some kind of sample pricing on what the, it might be M S R P, it might be, they might have to ask you for, you know, net, net f o b type of quotation. So preparing the price quotation is kind of the next step. Usually sending samples and, and getting that quote in.
And what I tell people is, be prepared when you’re, we’re coming to either, it’s, whether it’s a buying day or a or a trade show, you haven’t even started negotiating yet. So the two things that I would be prepared for is what you think the M S R P should be. Hmm. And keep in mind that you need to manage your channels. And by the channels, I mean, big box, independent stores, you know, smaller stores in a bit with the online, and I’m not talking about, like . . . if it’s Target online, that’s one thing. If you’re talking about online only, or even if we’re talking into some of the discounters like Costco or Sam’s Club, they work on different markets. What the buyer does not want to see is the same product at another channel that’s cheaper than what he can offer it for.
ARMAN:
Yeah. Or you’re selling it on your own website for cheaper than . . . That’s a no-no.
STEVE:
Protect yourselves. Know what those margins are. It’s all over the place. And we can get into that a little bit later on, but it’s all a GMROI calculation on margins and turns. But you want to be sure that you are leaving enough margin in there for the retailers to survive when you’re selling it outside of brick and mortar.
Right now, if it’s, if it’s, if it’s a retailer that has an online site, that usually takes care of itself. But I mean, Amazon’s the one that and it, I mean, it used to be this, if you talk to Europe they’re concerned with Aldi. Just as we’re concerned with Costco here, where they’re gonna work on, you know, 14 points which nobody can compete with. That’s why you see a lot of the bulk stuff, and you keep it away from apples to apples. Is the way to kind of manage that. You talked a little bit about transition strategy as well. Yeah,
ARMAN:
Yeah.
STEVE:
One of the things as you’re negotiating with the buyers is if you are replacing an existing supplier and taking their shelf space away from them, they may ask for a buyout. That, that there, there are, there are transition strategies.
ARMAN:
Got all this inventory. If I want your stuff, you gotta buyout this stuff.
STEVE:
Yeah. What are we gonna, yeah. How are we gonna deal with this? And it’s tough. I mean, that’s a tough pill to swallow. There’s always, you know, they, there are other things that retailers can do to get rid of that stuff. They can discount, they can, but it, it, like everything else, it can get pushed on, on the supplier and just gonna be, be prepared if when you’re quoting NetNet net f o b, especially to you know, a, a major chain retailer there are programs that they’re probably gonna want you to be involved in. And these are good programs to be in. It’s gonna, it’s gonna increase your turns, it’s gonna increase your sales. It’s going to make sure that the buyer doesn’t get stuck with your inventory, like he was stuck with your predecessor’s inventory. It’s just a, you know, a matter of keeping, you know, depending on the retailer, somewhere between like eight and 15% back in your hip pocket, just to make sure that you can take advantage of those programs and not mess yourself on the, on the margin.
ARMAN:
Yeah. Yeah. So, I mean, this whole pricing strategy, especially for someone newly coming into the market with, with a product, let’s say, some kind of innovation that might not have, it’s not always easy with an innovation to know what’s the right price point, unless it’s, like you said, replacing a very similar type of item. But what do entrepreneurs, new product developers, inventors, need to consider when pricing. Like, are there any other hidden costs that they need to be aware of? ’cause It’s hard to go back once you quote a price. It might be great for sales, but then you realize, oh man, after we make it and ship it and do all this stuff and all these there are some other hidden fees, maybe a few things people should . . .
STEVE:
There can be, you’ll, you’ll, you’ll, you’ll see like loyalty programs and new store opening fees and central billing fees, defective item allowances. That’s usually not more than like 1% or so opening order discounts. There’s marketing and ad monies that they’re gonna want. They, they, they will rebates is, is on the, on the flip side of that, rebates is something that a lot of the that’s more to the stores. But yeah, that’s, yeah, I mean, it, it’s always helpful to keep, to keep some back on that. Just to, just to, just to kind of, and, and it’s different for big boxes. Is it, is for, I mean, the, the other thing to, to keep in mind is, and I’m getting a little bit ahead into the, into the, okay, turn on investment stuff, but well, let’s go, let’s just jump into that now.
The buyers are typically evaluated and, and, and bonuses are paid on their, their gimroy, their gross margin, return on investment, some type of evaluation of that. Now we’re, it’s a, it’s a big box that might include some type of a metric on sales per square foot where the distributors, it’s gonna be, you know, it’s, it’s that, that’s not gonna be so much. But the, the, the, the key takeaway there is that it’s gonna really affect your the, the two things that are gonna have an effect on that are margins and turns. Margins is what you’re, what we’re just getting into there. What, what you, you know, what you’re selling price to, you know, what they’re buying it at and what they get. The margin on turns is a little bit more. You’re, you’re gonna negotiate the margin and you’re gonna, you know, you get the best you can.
You know, you figure about probably 15% higher figure in for if you’re, you know, calculating the, the, the the shelf price for right. Independent stores rather than big box. But one of the, one of the things that, that a lot of suppliers don’t really think about is ’cause they get so focused on what they wanna sell, is making the buyer a hero on, on the turns. Mm-Hmm. . And there’s two ways to accomplish that. A is driving sales. And I think that let’s back up on that just a bit ’cause I want to get your thought on that. The other is is inventory. If the be, the better you can do on just in times shipments and stuff, the more, the less they’re keeping in inventory at any, any particular time helps the buyer look like a hero now.
So he might, he might ask for, you know, direct to store deliveries when it doesn’t make sense to you. But he’s doing that for a reason. And it, it’s best to, even if, even if you do the calculation, it doesn’t make sense. And you, and you end up pushing him back into the, to the DC deliveries it’s something that he needs to explore. So, you know, help ’em out. And integrating and, and getting the, the, the smaller shipments, anything you can do to reduce their sitting on inventory makes that buyer look like a hero. And that, and that affects his, his gimroy and his bonus and all that kind of stuff. So really taking that stuff into account. And, and, you know, and back to the, the, the other issue on that, I think really a lot of suppliers think that the sale is done when they’ve, when they, when the buyer gives ’em the purchase order, and now they’ve shipped the products and now it’s on the buyer’s hands, and that it is a really foolish way to go about it.
You need to, you need to make that buy, you need to get that product off their shelves. It’s, it’s, it’s much the supplier’s responsibility as the retailers. And I think that with today’s technology, and it’s a lot of the stuff that your Blue Liner group does they can reach the, the, the, the customer independently of that and really kind of push them in the right direction and, and drive them into the stores. And at least when they’re in the stores you know, make them, give them more information and, and, and, and fulfill that sales proposition as a supplier rather than just hanging on the retailer. Yeah. And I mean, you can talk more about, about what is possible for a supplier as far as, you know you know go ahead. I mean, . Yeah,
ARMAN:
No, listen, absolutely. Well, well, your article, your article spoke to it really eloquently, you know, citing the percentage of sales that are not just influenced by mobile technology and people on their phones, but influencing sales that then get transacted in the store or just direct online purchasing. And any, any big box, you know retailer that we’ve talked to or met with over the last five years, what scares them the most is Amazon and online, anything online. So it’s like, it’s like it scares them, but they realize they have to also compete and, and offer value add there as well. So it’s, it’s, it’s a bit of, it’s become a bit of the wild west. And I think you’re right. The buyer’s got a thousand or 2000 products to look after. If you’re an inventor, you’re a supplier. All these terms, we’re using manufacture, it’s simultaneous. It’s, they’re equivalent terms synonymous. You’ve got one product, three products, so you know, your job’s not done. That’s why you gotta keep going to the shows. That’s why you have to have a website which may or may not have e-commerce. You could sell direct if you’re willing and able to really put a marketing program together to sell direct. Or having a store locator is a great idea, right? On your app, on your website that says, Hey, you could find us at these 37 Do it Best stores.
STEVE:
That, that’s a, that’s a great point. I mean, so put yourself in the, in the, in the, you’re, you’re talking to a supplier that just got a, a test with, you know, who whomever, target and they’re in and in the 30 stores. What can you do as a, as a digital marketing company to help drive those, the, those 30 stores to really kick it in those sales? Absolutely.
ARMAN:
Well, I mean, first and foremost, you want you, yeah, you want those, you want those zip codes, right? Okay. Give us the 30 stores, the zip codes, and then let’s run, you know, a little radius like geotargeting radius of let’s say 20 miles, 10 to 25 miles outside of each store. A there’s lists that could be acquired of actual homes and names and addresses for some direct mailers that can be done, that’s direct mail’s a little expensive and in like the non-digital side, but it’s still plausible. Now, similarly, okay, you got direct mail, now let’s append phone numbers. Let’s append email addresses. So these are people who live outside of those 25 or whatever it is, 30 stores within striking distance. And we could even append, okay, this person’s already a member of let’s say it’s Target or whoever the retailer is, right?
And without even working with the retailer, you can acquire that type of information. And then you can also work campaigns. So what my suggestion at a high level would be like, let’s create some meaningful content and offers, right? Like, here’s the product, it’s the inventor, almost like a mini commercial, 30, 60 seconds. Let’s create it in multiple video formats. Let’s start doing some geo-targeted advertising on it could be TikTok, Instagram, LinkedIn, you know, Facebook, probably not LinkedIn, but more, more whatever the, the right demographic is within the different networks. And then start driving the offer. How excited will the buyer be to say, wow, you guys are actually doing some ads driving people to either the store locator page on your website, which point star store, or directly to some offer, or because it’s a localized ad in a particular town, you’re just giving someone, Hey, get it at Target.
Here’s the address, click here to get it now before we’re outta stock, or whatever the offer is, the compelling offer to, to get them in because there might be a special deal, a two for one, whatever it might be. So those are some of the simple things. I mean, maybe not so simple, but certainly doable within, let’s say a one month campaign that can be set up, those geo-targeted lists acquired. Again, all this requires some budget. You have to have an expert or experts, you know, like, you know, agencies like Blue Liner that can actually do that. And then you have to have a bit of a budget to advertise. And then the beauty is that it’s all very measurable, though. We gotta create some kind of QR code or some kind of offer strategy that when they do the redemption and the purchase in the store, it can track back to, to that particular offer. They, they have it on their phone or they, they have some kind of incentive to communicate that it’s because of this campaign that it, that I went to buy the product. And then you show it to the buyer when you have your quarter, your annual meeting. Yeah, exactly.
STEVE:
You, you come in with you, you come in with this as your plan in the initial meeting and you’re saying, this is what I’m gonna do to, to, you’re not gonna get stuck with this product. I’m gonna help you move it off your shelves. And you’re, you’re taking, I mean, anything you can do to mitigate the risk that the buyer’s taking is make ’em look like a hero and take away his risk. You’re making it a lot easier to say yes.
ARMAN:
Yeah. And, and you know, and it’s interesting. I just thought about it now. But this has come to play before where we’ve utilized this. You can use that as part of your negotiation with the buyers as they’re pushing back on price and co-op and all that. Well, we’re going to, we’re gonna take on this responsibility and, and because of that, we need to make sure to protect these margins a little bit because that’s how we’re gonna, we’re gonna pay for those ads and we have the experts that can imp implement it. And obviously if you have any, if you have any past experience with that, that could show the case studies from past work you’ve done, past campaigns, other engagements, that’s always more convincing. But if you don’t, you’ve gotta put a a di a reasonable plan together. Something that people, you know, the buyers know they’ve seen a lot of this, right? And they know which of their suppliers does good marketing to support them and support the, what’s the word you use? Turnover, right?
STEVE:
Yeah, I mean, you, you’re talking to, when you, when it’s, it’s a great part of negotiation because again, the buyer and the buyer’s mind is the gimroy, the, the, and that’s about margins and about turns as you are explaining to him how you’re going to, to, to increase his turns, there’s the prices on the margins, and you, you can expect a little bit higher margin if you’re gonna increase his turns. And that’s acceptable as long as it all comes down to the number he needs to hit. Right. that you’re, you’re absolutely right. That’s a, that’s, that’s a way to, to, to to, to negotiate better pricing. And but obviously you’re gonna be spending some money to, to, to do it, but you don’t, you don’t wanna be one and done. Right. The, the point here is to is to, is to, is to .
It’s, I heard I had to really grow within the retailer to get in there and become a, a, a part of his company that is integral and that, that that can’t get rid of. And, and normally, you know, over the course of time, and I’ve been this at this for quite a long time, you can see from the gray you keep an account for, you know, a typical retail account you’re gonna keep for seven to eight years. Yeah. So as you’re, as you’re doing your calculations on what you think the, the the total value of this account is, you know, and, and feeding in all the stuff you’re gonna have to spend to get it, that’s what you should be looking at somewhere in, in, you know, you’re gonna keep it for 78 years and then after that, after that, everything’s gravy. If you can keep it for longer, a lot of people can, a lot of people keep it for shorter ’cause, you know, of whatever reason. But the tip, the, the average seems to be about seven, eight years.
ARMAN:
That’s a good, Hey look, that could be a really good amount of business and, and, and a pathway bridge to, to many other, your next product or your next set of deals. And just learning how to do that type of business. So, so the summary of a lot of what you’re saying I’m taking away is really learning how to think like a buyer and understanding what their buttons are and what’s gonna make them look good, you know, to their boss, to their company. And, and, and really to the bottom line, it’s gotta be win-win. But I, I think anytime
STEVE:
You’re negotiating, you have to have empathy for the person. You, you have to be able to look at things from their point of view to be able to Yeah. To give them what they need to say yes.
ARMAN:
Right. And, and I just, I wanna say, you know, for our audience also, I mean, we’re talking a lot about this engagement with, with buyers and, and selling through, through retailers and that’s, you know, our main topic today. But we’d be remiss if we didn’t mention that a lot of these marketing tactics we’re talking about to promote your product can also be employed to sell directly and to promote how you can sell your brand as another channel. Because, you know, channel management is important. And I know that’s one of the topics that, that you’re an expert in. So I want to, I wanna move into that next, but as part of that Absolutely. And why not at least conceive of a direct sales strategy. Now sometimes people think, oh, that’s great because when I sell direct, I can sell it that m ss r p, and it’s like, yes, you can, or, or near it, you have to make sure you don’t undercut your, your other channels.
But that, all of that extra margin, that’s your marketing budget. You gotta figure out how to use that to do some of the things we talked about before, how to drive that demand. B two C marketing and advertising is very pricey, but with all this technology, it’s becoming more and more targetable and targeting is, is available in, in every kind of sector, every kind of age group worldwide. So, so there’s some amazing opportunities in digital, but again, it takes the real expertise, you know, you kind of have to have part of it in-house and then part of it, likely through agencies and, and other experts that can team up with your in-house marketing minds.
STEVE:
Yeah, I mean, it depends on how big you are. If you’ve already got a team that’s doing it, then that’s one thing. But if you’re a startup I, I’m biased ’cause I’ve worked with you before. I, I think Blue Liner did when we did the Adjust Go stuff. You guys did a great job with that. So I, I would, I have absolutely no hesitation in, in recommending Blue Liner for, for that kind of stuff. You talked a little bit about the channel stuff. The channel really, it’s about differentiation. It, it’s possible to sell all the different channels, but you, you just have to be mindful that they can give them an opportunity to, to make their money in their channel. So if you’re selling to, you know, Walmart one item, whatever you’re selling to Target needs to be different. Otherwise it’s gonna come down to it’s, you’re gonna commoditize it.
So whether that’s a different brand, a different product, different design, find some way that the customer isn’t going in there and saying, oh, this is X here and it’s X minus five here, and what, you know, I’m outta here. And then now your buyer’s mad at you and you’re, you’re not gonna, that’s not sustainable. You, you need to especially with, with different channels working on different margins, you have to be very aware of that. Like you talked about, especially with the with, with, if you’re selling on your own if you’re gonna sell, what, if you’re gonna sell the brand that you’re selling in retail on your own at a lower margin, you’re gonna lose your retail business. Yeah. They’re, they’re, they’re not gonna want to compete with you.
ARMAN:
So yeah, we, and we talked about that with one of the, you know, not to be named, you know, one, one of the fashion brands we’re brainstorming about that, that had an a lot of great different product, but to sell in different channel, just, just give them a different line, give them a special line, something different, something unique that doesn’t compete. And that’s, that’s not always easy to do, but that’s, I think, part of an effective strategy. I know you were recommending that.
STEVE:
Yeah. I mean, it doesn’t even have to be drastically different. It just has to be a little bit different. Just, you know, just, just to create a little bit of differentiation. Yeah. That’s great.
ARMAN:
I know we’re kind of rounding out, Steve. I mean, it’s great. I know we can, we can talk forever. So hopefully, you know, the audience here has found it interesting. There’s a couple questions came in. I’ll see how many I can get to here. Well, first of all as far as buying upcoming buying days, I’m not sure if your website, you know, has the updated ones or if not, where can, where can listeners get the updated list of upcoming buying days?
STEVE:
I mean, if you, if you want, just send me an email there, there might be some stuff on the, on the, on the site that needs a little work. You know we’re we’re, we’re, we’re hardware guys. We’re not web designers. So the, the, the king Fisher event is September 26th in Chicago. It’s gonna be at a hotel near O’Hare airport, so it’s really easy in and out. And Menards is gonna be November 9th up at their offices in Eau Claire, Wisconsin. If you want any information on that, just send me an email. It’s ss Powell, s p o w e l [email protected]. I’ll get you the direct link on, on where the, the w be warn that the Kingfisher is sending over about six of their international sourcing merchants. They’re not covering every product. So like plumbing and electrical are the, the, their buyers are not coming over. I, I don’t, they, they may not even have people in place for that, so it’s including most products, but not all. And I’ve got it kind of listed in there on what’s included in, in, in each category and what’s not. Menards is right at their offices, have their whole team there.
ARMAN:
Okay. Okay. Thanks for that.
STEVE:
We’ll get the website fixed as soon as possible.
ARMAN:
For sure, for sure. No, it’s great. It’s great that people are asking, and those, those sound like two very exciting shows. And I like Menards. I know sometimes they could be, you know, controversial in certain ways, but I like what they do.
STEVE:
They are tough to get into, but once you’re in there, they are great to work with.
ARMAN:
Yeah.
STEVE:
That has been, you know, we’ve, we’ve helped, you know, dozens of companies get into Menards, and that’s what they all say is, you know, tough not to crack. But once you get in there, it’s good business.
ARMAN:
Great. Good to know. And one last question. What are your thoughts on on SEMA and, and Apex? There’s these shows, I don’t know if those are shows you, you deal with or know too much about . . .
STEVE:
I don’t know much about those at all. To be, to be honest I, I, those are not familiar to me, which probably makes me think they’re not
ARMAN:
Okay. Well, it’s I’m looking, I’m looking it up. The question came in, well, one of them, well, that’s what, why these are more automotive related. So it, it sounded so familiar when he mentioned sema because that’s, that’s one of the auto shows that we had taken Exeter Technologies in our park zone products and back. More familiar. Yeah, yeah, yeah, yeah. I, so man, it’s been a while since I’ve been at those shows. That question came in from, from one of the audience members, but I do remember, in addition to c e s the CIMA show was very effective for us to get in front of same type of conversation we’re having about the d I Y market on the automotive. And particularly we were in automotive electronics. And man, that was 20 years ago when we were doing that with Exeter Technologies and doing some of the first smart car types of tech. And nowadays, as we know, automotive and electronics is like hand in hand. Everything’s a smart something or another. So yeah, if I,
STEVE:
If I’m gonna offer one piece of advice for those major shows, and I would include the Eisenhower Mess and, and the hardware show in this is don’t go in with just, you know, we’re gonna put up our, our banner and, and hope people come by. Do as much work on the front end. If they’ve got like, you know, buyer matching programs that are available, take advantage of ’em. You know, try, try to get the word out, whether it’s, you know, do some social media blitzing beforehand try to drive traffic. It’s same, same as what we’re talking about with the retail. Don’t count on the show to drive traffic to your booth, drive it yourself. Do as much as you can to set up meetings during the show. And, and, I mean, know that people aren’t gonna make those meetings necessarily, at least not on time. The, the shows tend to stretch everyone’s, the, the schedules get blown outta the water, but the more you can do on the front end before the show, the better the show’s gonna be for you.
ARMAN:
Yeah, agreed. No, I agree. I mean, it’s always, there’s the pre-show, there’s at the show, and then there’s post-show, and it’s like three, three phases. And usually the post show when everyone’s tired and, you know, kind of, we’ve talked about with different shows we’ve all attended over the last six months, you’ve got the stack of business cards, these leads, and people need follow ups. They need the information that you promised them. And that’s, that’s a big part of the discipline. We’re we do have some more questions coming through, but we’re, we’re running out of time. So Steve,
STEVE:
I see one here from Scott McVay. Scott, just, just send me an email. We, we can talk about Menards. I understand what you’re, what you’re talking about here. And I can, I can talk you through that real quick.
ARMAN:
Great. Great. Yeah, no, Steve you, you’re, you’re an unbelievable resource. You and I know se send my best to your dad as well. I know he founded the organization with, with a partner, and you’re, you’re the heir apparent. You’ve, you’ve taken it on and, and made it your, your, you know, career and it’s just pearls of wisdom, you know, coming out of you. So any additional questions that didn’t get answered I’ll make sure to share them with Steve. Make sure to leave us, you know, your email address, either in the LinkedIn comments or in whatever fashion you got introduced to this this podcast. Steve, thanks for your time, man. We’ll see you soon. Thanks
STEVE:
Everyone.
ARMAN:
All right, cheers.
